China is indisputably one of the world’s top economic superpowers, home to 1.5 billion people inhabiting nearly 10 million square kilometers. Its economy is vast and expanding rapidly, and out of all its vibrant, vigorous cities, Shangha is the most competitive—seemingly driven to establish itself as the financial center of the new Chinese economic empire. While Beijing has remained the seat of administrative authority and the focus of international attention, Shanghai is the true industrial capital and also is rapidly becoming the chief financial hub. Nearly half a million expatriates now call Shanghai home, a city that has proven willing to embrace the latest innovations in business technology and actively court international businesses to settle in its expanding financial districts. In 2010, the city spent $45 billion on hosting the World Expo and upgrading its already world-class transport and data infrastructure, placing it right on the cutting edge of modern business environments.
History and Culture
“Shanghai” literally translates as “on the sea” and most of the city is only a few meters above the (thankfully calm) East China Sea, situated right at the mouth of the Yangtze Delta. It is the second-most populous city in all of China, with 19 million inhabitants within the municipality, but has only been a major metropolis for a few decades, meaning that there is not a great deal of historical heritage around, even in the older parts of town. Shanghai almost seems to run on an obsession with everything being newer, shinier, and faster on a day-by-day basis, and while there are some excellent museums, temples, and gardens, the focus is undoubtedly on progress and vibrant modernity.
Shanghai had started to establish itself as being more than just a gateway into the Chinese interior by the end of the 1920s, earning a reputation as “The Paris of the East.” The outbreak of World War II and the subsequent rise of early Communism curtailed its progress until the mid-1990s, when a new wave of development and construction followed the emergence of the “tiger economies.”
Getting a Visa
Visa procedures vary from city to city in China, but thankfully the formalities for entry via Shanghai are straightforward because of the system being geared toward handling large volumes of foreigners. In other parts of China, the entry process can be a nightmare of unreachable officials, obscure documentation, and staff that verge on the openly hostile. Although the visa process for Shanghai still is quite rigorous, it is comparatively clear-cut with a high degree of procedural transparency.
The documentation requirements to enter China on a work visa are significant, but companies based in Shanghai have special dispensation to conduct a great deal of the paperwork on your behalf. Your employer will put together a fairly comprehensive bundle of documents for you, which, for certain types of visa such as a “legal representative of a foreign company,” includes everything down to your résumé, the company’s shareholder list, and even its articles of incorporation. At your end, you will have to ensure you have a certificate proving that you have a job waiting for you in Shanghai, including a section attesting that you have skills that the company could not reasonably be expected to find locally, and start the application process in person at a Chinese embassy in your home country, as applications by mail are not permissible. Visas for spouses and dependents can be made at the same time and will require additional documents such as marriage certificates, birth certificates, and the like.
Your initial access will be under a single-entry Z visa, valid for three months. The employee and a representative of the employer will have to visit the local police station within 24 hours to register confirmation of accommodation, as well as a certificate of a medical checkup at an authorized facility, without which a Temporary Residence Permit will not be issued. The Permit will be made valid for the duration of the employee’s contract, which typically is 12 months. Make sure documents are current and stored somewhere handy, as the Public Security Bureau makes frequent checks in residential areas.
Accommodations and Living
As Shanghai modernized and spread, it created many attractive suburban areas that have proven popular with the growing expatriate community. Although some commentators have criticized the new suburban regions for no longer retaining a Chinese identity, it has provided an ideal environment for international workers to set up family homes and establish groups and communities. While the pace and vibrancy of the city remains typically Chinese, the local culture has become so cosmopolitan that expatriates are able to integrate with far less effort than in other slightly more daunting urban environments.
Beijing has on average more affordable housing; Shanghai has such a diverse range of accommodation grades that expatriates are likely to be able to find a price point that suits them. Many of the inbound expatriates have living allowances provided by their employers, but increasingly are relocating without such benefits.
Housing that frequently exceeds modern Western standards is being constructed or renovated in nearly every section of the city. Pudong is a rising area with some of the best deals by price and by standard, particularly the compound villas, proving itself popular among expatriate families with children. Singles and young couples often prefer to live downtown on the Puxi side in the French Concession, Luwan, and Jingan districts.
Expatriates looking for a property definitely will need to retain the services of a local agent unless their Mandarin is particularly good. Official documentation, including employment and accommodation contracts, must, by law, be in Chinese.
Tax and Earning
Tax throughout China is paid progressively after an initial exemption of CNY4,800—around $720 at a 0.15 exchange rate. Income tax rates start at 5 percent on earnings above the exemption allowance, rising in small increments up to 45 percent for monthly salaries in excess of $15,000. Most capital gains tax will be charged a flat 20 percent rate.
Employers in Shanghai are obligated to submit monthly reports on their employees’ wages, complete with photocopies of passports and records of tax deducted at source. Social Security also will be deducted by your employer, working out to be around 7 percent of the employee’s monthly salary, matched by a 20 percent contribution by the employer.
Two of the most important elements of the local tax system for expatriates are the 183- and 90-day rules. If you spend more than 183 days in China in any calendar year, then you will be liable to pay individual income tax on all income you make that year from activities in China. Should you stay in China for more than five years without a cumulative absence of 90 days each year, then you will become liable for tax on all worldwide income without limitation as to its source.
Language
Aside from some issues regarding state-mandated documentation, expatriates typically do not encounter significant language barrier problems. While English is spoken by less than 1 percent of the population overall, business and store-owners in the main expatriate and financial areas of the city often will speak enough English (or be familiar enough with what expatriates want) for you to get by. Shanghai has its own particular dialect of Mandarin (Shang hai hua), and learning just a few words will go a long way to generating goodwill with the locals. It has been the experience of many expatriates that speaking even a little Chinese around Shanghai will add greatly to your experience of local life and the convenience of getting around.
Living Locally
Shanghai has reached a point of cosmopolitan development that expatriates often will be able to choose how much local flavor enters their day-to-day living. It is entirely possible within the expatriate enclaves to eat Western food, watch Western TV, hang out in brand-name coffee shops, and listen to Anglophone radio throughout the day without experiencing much in the way of Chinese culture. However, anyone thinking of making the move is encouraged to engage with local customs and activities, even if it is to no greater extent than partaking of the excellent local food. Although it is not unheard of for shop vendors and café owners to add a little bit to the bill when dealing with expatriates, it is rarely extortionate, and the general cost of restaurants and of groceries is significantly below that of Western European norms. A visible and vigilant police force in the urban areas also means that expatriates feel comfortable in exploring a much larger area of the city than can be the case in less-policed metropolises.
Home Comforts
Many items to bring or leave behind may be obvious when relocating. Do not bother bringing all your electronic goods, as they often are cheaper to buy locally. There are some less apparent categories, such as clothes; if you are of a larger body type by Western standards, then expect finding clothes that fit to be a tricky proposition. Anyone pushing 6 feet tall will definitely want to stock up on clothes before traveling. Cheap furniture is readily available, and assignees should consider only bringing large household items if they are of particular sentimental or practical value.
While accommodation and shopping opportunities exist to suit nearly every budget, the cost of labor is cheap, so some previously prohibitively expensive luxuries now are within reach. Many expatriate households employ a nanny, driver, or a maid (called an ayi) and more are able to afford cleaning or laundry services.
Health
Shanghai has a reputation for having the best medical facilities in all mainland China. Western-style clinics have been set up especially to serve the ever-expanding expatriate community. Although Chinese law does not permit Western clinics to offer the entire range of medical care and treatments, all Western clinics are networked with reputable alternative public hospitals. Expatriates are advised to ensure that their insurance covers treatment in the clinic of their choice.
Education
Thanks to the size of the expatriate community in Shanghai, there is a wide selection of international schools in the metropolitan area. Schools are available teaching the International Baccalaureate programs, the American curriculum, and the English National curriculum. In keeping with the attitude of the rest of the city, these schools have some of the most advanced teaching facilities and technologies anywhere in the world.
As part of the push to make the city ever more attractive to expatriates, Chinese authorities have opened up some of the local Chinese schools to expatriate children, making Shanghai a great destination for assignees with families but without educational allowances. Not only are public schools significantly cheaper options, they also provide an opportunity to completely immerse children in the local culture and language for families who are considering a longer-term relocation.
Bringing Your Pets to Shanghai
In general, only cats and dogs are allowed into China, and additional restrictions can be imposed by the local city authority. In Shanghai, a license will be required to keep a dog and will cost you about $150 annually. While Shanghai is a friendly city for well-behaved pets and pet owners, you should allow a full month to make sure all the requisite paperwork clears before transportation. Large dogs are not allowed in central Shanghai, and patrols will impound animals that exceed acceptable size limits. Please check the eligibility of your dog before transportation.
Items of Note
The major cities of China can be crowded by the standards of even the largest Western metropolis. The pace of life and street traffic, combined with Shanghai’s population density, can be overwhelming, so a visit is strongly recommended as a trial experience.
Air pollution also is mentioned frequently by expatriates. The title of the 2010 Expo was “Better City, Better Life,” which has become the butt of several jokes because of the significant spike in air pollution that occurred during its creation. It is common to see commuters wearing surgical and filtration masks while traveling to work. If air quality is a concern, avoid accommodation close to the elevated freeways, such as the Yan An Xi Road, Xintiandi, and the Nanjing West Road. The widespread construction work across the city results in airborne dust, and expatriates looking to escape the worst of it are advised to look for already established neighborhoods, apartments on higher floors, and investing in air conditioners with filtration systems.
While infrastructure improvement is ongoing, generally received wisdom advises not to drink tap water. It is, however, considered fine for bathing, utilities, brushing teeth, and even for cooking.
Alexandra Wassenhoven is relocations manager—Asia, for Move One, Shanghai, China. She can be reached at+86 21 5212 3989 ext. 109 or e-mail alexandra.wassenhoven@moveoneinc.com.